Lately, my primary trading focus has been on relative strength winners that’re benefiting from COVID-19.
One of my favorite trading setups is the rally prior to an earnings report on bullish anticipation of the actual report. Typically, I start this trade about 7-14 days prior and/or when it hits key support levels.
Last week, Amazon (AMZN) was a great example of this. Heading into earnings they rallied hard even though their actual report turned out soft. I was able to make a good trade because the anticipation was high, making the stock trade higher, but it was also due to the fact that I got out before the reports actually surfaced. This allowed me to ride the bullish run without getting burned by the less-than-perfect report.
I plan to do something similar with Alibaba (BABA).
Even though I wouldn’t necessarily want to own this long term, I love trading it short term. With its recent fall in price, it could potentially become an even better buy because you can get it on a discount going into earnings. Plus, I still think it has room to make a bullish run. E-Commerce has been particularly hot, and we’re still a few weeks away from earnings allowing it time to climb back up.
As for additional Chinese names — I like JD. I use the exact same setup on it, except I like it for a buy off of the 50 SMA, as it didn’t fall as far as Alibaba.
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